The Form IR21 must be completed and signed by the company secretary/director, precedent partner, sole-proprietor, manager, honorary secretary/treasurer, representative of the non-resident company or a person authorised by the employer.
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A) How do I complete the Employee's Employment Records Section of the Form IR21?

Example 1 - Salary paid in advance and employee left in the following month
Assume your employee's salary was paid in advance on the 27th of each month. The employee received his last salary of $2,500 on 27 Jan for the period of 1 Jan to 31 Jan . He has not turned up for work since 11 Feb . The amount of monies that should have been withheld for tax clearance would be $892 (10/28 x $2,500) for the period of 1 to 10 Feb . Please complete the Form IR21 as follows:

  1. Date of cessation: 10 Feb
  2. Give reasons if less than one month's notice is given to IRAS before employee's cessation: Left without notice
  3. Amount of monies withheld for tax clearance: $892
  4. Reasons for not withholding monies due from date of notification: Salary has already been paid  
  5. Date of payment: 27 Jan
  6. Amount paid: $2,500
  7. Period in relation to the last salary paid: 1 Jan to 31 Jan

 

Example 2 - Salary paid in advance and employee left after receiving the salary
Assume your employee's salary was paid in advance on the 27th of each month. The employee received his last salary $2,500 on 27 Jan for the period of 1 Jan to 31 Jan . He has not turned up for work since 28 Jan . You would not be able to withhold any money. Please complete the Form IR21 as follows:

  1. Date of cessation: 28 Jan
  2. Give reasons if less than one month's notice is given to IRAS before employee's cessation: Left without notice
  3. Amount of monies withheld for tax clearance: $0
  4. Reasons for not withholding monies due from date of notification: Salary has already been paid
  5. Date of payment: 27 Jan
  6. Amount paid: $2,500
  7. Period in relation to the last salary paid: 1 Jan to 31 Jan

B) How do I complete the Income Section of the Form IR21?

You should report your employee's income for each calendar year in the Form IR21.

Example:
If the period of employment is from 1 Nov 2022 to 31 Jan 2023, you should report your employee's income as follows:

Year 2022 - Income for the period of 1 Nov 2022 to 31 Dec 2022
Year 2023 - Income for the period of 1 Jan 2023 to 31 Jan 2023

If you have already transmitted the employee's 2022 income via the Auto-Inclusion Scheme (AIS), you need not report the same 2022 income in the Form IR21.

You may refer to the e-Filing User Guide (1.64MB, PDF) or Explanatory Notes to Form IR21 (332KB, PDF) for more details on filing the Form IR21.

What should I do if there are unexercised share options?

Under the "deemed exercise" rule, a foreign employee is deemed to have derived gains from the unexercised/restricted Employee Share Option Plan (ESOP) and unvested/restricted Employee Share Ownership Plans (ESOW) which he has at the time he ceases to work in Singapore with the employer which granted him the ESOP or ESOW. This rule applies to ESOP and ESOW granted from 1 Jan 2003.

Affected employees:

  • Foreigners (non-Singapore Citizens).
  • Singapore Permanent Residents leaving Singapore permanently.
  • Singapore Permanent Residents posted to work overseas.

 

What types of ESOP and ESOW are affected?

They are:

  • Unexercised ESOP granted to an employee while he is employed in Singapore.
  • Restricted ESOP granted to an employee while he is employed in Singapore, where the moratorium has not been lifted when the employee ceases employment with the employer.
  • Shares granted to an employee while he is employed in Singapore, under any ESOW with vesting imposed where the beneficial interest from the ownership of the shares has not yet been vested to the employee when he ceases employment with the employer.
  • Restricted shares granted to an employee while he is employed in Singapore, under any ESOW where the moratorium has not been lifted when the employee ceases employment with the employer.

 

How do I compute taxable gain under the "deemed exercise" rule?

Taxable gain is A - B

A refers to the open market price of the shares as at:

  • one month before the date the employee ceases employment; or 
  • the date of grant of the ESOP or ESOW,
    whichever is the later.

B refers to:

  • the exercise price of the shares under the unexercised/restricted ESOP; or
  • the price paid or payable for the shares acquired under the ESOW with vesting/moratorium imposed.

 

What if the actual gain upon subsequent exercise / vesting / lifting of moratorium is less than the taxable gain under the "deemed exercise" rule?

The employee can apply for a reassessment of the deemed gain within 4 years from the year of assessment following the year in which the "deemed exercise" rule is applied. For example, for deemed gain taxed in the Year of Assessment 2023, the application for reassessment must be made by 31 Dec 2027.

The employee should submit the completed, signed and password-protected PDF copy of the Template for Reassessment of Tax on Deemed Share Gains (75.1KB, XLSX), together with the relevant supporting documents, via myTax Mail e-Service on myTax Portal or using the online form. Please refer to the Explanatory Notes (point 4) of the Template for details on the required supporting documents.

 

How do I compute actual gain?

Actual gain is C - B

C refers to:

  • the open market price of the shares on the date of exercise of the ESOP/date the moratorium is lifted for the restricted ESOP.
  • the open market price of the shares on the date of vesting/the date moratorium is lifted for the shares acquired under the ESOW.

B refers to:

  • the exercise price of the shares under the unexercised/restricted ESOP; or
  • the price paid or payable for the shares acquired under the ESOW with vesting/moratorium imposed.

 

Tracking Option for unexercised/restricted ESOP and unvested/restricted ESOW for employees seeking tax clearance

As an alternative to the "deemed exercise" rule, the Tracking Option allows an employer the option to track when the ESOP or ESOW is exercised/vested.  The employer can track and report the gains from the ESOP and ESOW based on actual realised gains. The employee will be assessed on such gains based on his tax residency status at the time that the gains arise.

The employer will need to meet the qualifying conditions and apply to IRAS for the Tracking Option. For more information, please refer to the following e-Tax Guide:

Tax Treatment of Employee Stock Options and other Forms of Employee Share Ownership Plan (Second Edition) (496KB, PDF).

C) Why do I have to provide the particulars of the employee's spouse and children in the Form IR21?

If your employee is married and the dependants' particulars are provided, the relevant tax reliefs may be included in the employee's tax assessment. Completing this section may help to reduce the employee's tax liability and the need for a subsequent revision to the Clearance Directive.